The rent is not the return: a first rental-property worksheet.

A rental listing can make an investment look simple: expected rent minus the mortgage equals the money left over. That shortcut leaves out many of the costs that decide whether ownership works. Before evaluating a property’s upside, build a plain monthly worksheet and label every estimate.

Begin with income you can explain.

Use comparable rentals and the property’s actual condition to support an estimate. Ask whether the comparisons are current asking rents or documented leases, and whether utilities, parking, or furnishings are included. Existing leases deserve their own review.

Keep vacancy separate. Rent that could be collected every month is not the same as rent you can reasonably expect to collect over a year. Do not count a hoped-for increase as though it has already happened.

An example—not a Denver market forecast.

Suppose a hypothetical property rents for $3,000 per month. Set aside $150 for vacancy, $240 for management, $150 for routine maintenance, and $150 for future large replacements. Add $300 in property taxes, $150 in insurance, and $100 for owner-paid costs. These assumed amounts total $1,240, leaving $1,760 before debt service.

If principal and interest are $1,900 per month, the simplified cash-flow result is negative $140—not the $1,100 that rent minus principal and interest alone suggests. If your lender’s payment already includes tax and insurance escrow, separate those components so you do not count them twice. These are invented teaching figures, not local cost estimates or a return projection.

Separate the monthly budget from cash needed up front.

The down payment is not the full entry cost. Add closing costs, immediate repairs, any work needed before occupancy, and operating reserves. Keep those categories visible rather than burying them in one purchase-price figure.

Ask qualified providers for property-specific insurance, financing, management, and repair estimates. A reserve allowance smooths the worksheet; it does not make a roof replacement cost only one month’s allowance. Keep enough attention on the actual timing of large expenses.

Test the assumption most likely to disappoint you.

Run a lower-rent case, an extended-vacancy case, and a major-repair case. Ask whether you could carry the property under each, and whether the proposed use is permitted. For an HOA property, inspect restrictions and association finances before relying on a rental plan.

Cash flow, appreciation, loan principal reduction, and tax effects are different things. This worksheet addresses the first. Evaluate the others separately with the appropriate financial and tax professionals rather than using hoped-for appreciation to conceal an operating shortfall.